9. Financial and Regulatory Compliance
It is extremely important to the Paycer team that Paycer is a transparent and regulated company operating within a legal framework. This will allow customers to invest with a good sense of security over the long term.
The financial operations targeted by Paycer are most likely subject to licensing by BaFin, which may include the obligation to obtain a permission according to § 32 of the German Banking Act (KWG). The application for a banking license can take a long time, so a partnership with a banking-as-a-service provider is targeted to guarantee quick market entry. Licensed partner banks may also be more conservative in some cases, which may require that some features and services not be provided at the start of the Paycer platform. The Paycer team is aware that there are numerous legal hurdles, and in some cases, there is still no precise case law. But the Paycer team is already well positioned from a legal point of view and will work together with other specialist lawyers in the field of finance and crypto in order to overcome all legal hurdles.
The Paycer token (PCR) will be analyzed by a specialist cryptocurrency and finance lawyer to evaluate whether the Paycer token is a full utility token or a financial instrument. Should the token be classified as a financial instrument, this would mean that a prospectus requirement and regulation by BaFin could become mandatory. Either the path of far-reaching regulation of the token will be chosen, or the design of the token will be slightly adapted in order not to fall in the regulated area. Whichever option is selected, the token will remain within a legal framework.
To comply with applicable laws and regulations and to counteract money laundering, terrorism, organized crime, and drug trafficking, the Paycer company needs to know who its customers are. Therefore, either a KYC (know your customer) process will be established, or existing KYC service providers will be used. In order to enter the market more quickly, the use of an existing KYC provider is preferable in the first stage. However, to operate more independently and to have more intellectual property in the company, a dedicated Paycer KYC process will be aimed for in the future. In order to conduct financial transactions at Paycer, users must identify themselves via the KYC process, and only then can they be granted full access.
Although Paycer will mainly target user groups that will use a centralized platform, Paycer also intends to offer the use of its protocol in a decentralized manner. In order to offer decentralized financial processes and still comply with applicable laws and regulations, existing decentralized KYC service providers must be used. Decentralized KYC providers are fairly new, but it will certainly be possible to find a legal framework for working with such providers for DeFi services. Through the use of decentralized KYC, Paycer will seek to provide DeFi services in a legally secure setting.